What is financial reporting software?
There are hundreds of different software options for tracking different aspects of a business’s financials. The financial data for an average business may be scattered around a dozen or more different tools, systems, and software solutions. Even the smallest businesses will likely use accounting software, payroll tools, a project management suite, some sort of job costing or supply chain software, payment software, and a billing and invoicing tool.
When it’s time to run financial reports, a business could theoretically run reports within all its different software individually; however, this is time-consuming, takes lots of resources, and can’t provide a clear company-wide picture of the financial situation. Businesses need a tool that helps all their financial software communicate so they can get clear, simple, and unified reports.
Tools exist for tracking all of a business’s financial data. Financial reporting software can connect to a business’s entire suite of financial software, collect and store all its financial data, analyze that data, and provide detailed reports. These tools provide a full-stack solution to reporting requirements all in one system, and often provide additional financial analysis and modeling features as well.
Can a BI tool do financial reporting?
A BI tool like Domo can easily handle a business's financial reporting requirements.
Many business leaders think of financial reporting software as a subset of accounting software, but business intelligence tools are often a better fit. BI tools offer complex modeling features and data analysis tools that accounting-focused tools don’t have, and provide better insight into a business’s financial health. BI tools are better than accounting tools for financial reporting in a few key ways.
Integrations
Many accounting tools, like Xero or Quickbooks, offer reporting tools, but these tools are often limited by their integrations and can’t communicate as effectively as even basic business intelligence software. Accounting tools are only meant to communicate with other finance-focused tools, while BI tools can communicate with a full stack.
Often, a business might have crucial financial data that's stuck in a non-financial tool like a project management suite or a CRM. An accounting tool might not integrate with this software, so any reports it provides will be limited. A BI tool, however, can communicate with all kinds of business software, so data isn't trapped in a non-accounting tool.
Complete tool
Often, accounting tools are limited to only analyzing financial data. While this might seem fine, especially for a financial reporting tool, it actually puts a huge limit on the tool’s usefulness.
Business intelligence tools can analyze financial data while also analyzing all of a business’s other data. Not only can BI tools run important financial reports, they can also put those reports in context by comparing that data to other statistics, benchmarks, and KPIs. This helps drive deeper insight that helps employees make better-informed decisions.
Key financial reporting features
While most business intelligence tools can work as financial reporting software, not all options are fully-featured and make the most of BI’s unique advantages in the financial services space. Here are some features to look for in a good financial reporting tool.
Reporting tools
Obviously, a financial reporting tool should have robust, useful, intuitive reporting features. Many BI tools have templates for generating common reports like cash flow reports, expense reports, and profit and loss statements.
Often, businesses need to build reports that aren’t covered by common report templates. With accounting software, it can be difficult or impossible to build new reports. BI tools, however, allow users to create custom reports. Many tools allow for ad-hoc reporting, which lets any user quickly build out custom reports based on data they already have.
Flexible reporting tools are essential for businesses looking to leverage their financial data towards insight. Good reporting tools help employees process and internalize their data, which helps them make data-based decisions.
Forecasting
Forecasting tools let businesses analyze their previous and current financial data to project what their financial situation might look like in the future. Businesses can use forecasting in some simple, basic ways, like projecting future cash flows. Forecasting can also be used in more complex, creative ways, like building seasonality models or estimating an employee’s potential value.
Business intelligence tools offer new perspectives in financial forecasting. With a full-stack data solution, businesses can make forecasts using many different metrics, not just financial ones. With more data to funnel into the predictive analytics algorithms, financial forecasts will have better context and lead to more actionable insight.
Forecasting tools in Qlik.
In its simplest form, forecasting is just a guess as to what a company’s financials will look like in the future. Businesses have to use these guesses all the time, from forecasting payroll requirements, to planning out procurement costs, to figuring out projected revenues for whitepapers. The more accurate the forecasts, the more efficient a company will be.
Dashboarding and visualizations
Financial reports can be hard for the average person to read and understand. At most organizations, analyzing financial data is thought of as an accountant’s job; the average employee can’t access financial data, and probably couldn’t understand it even if they had access.
Data visualizations and dashboards can help everyone in an organization to understand complex financial reports. BI tools can turn financial reports into graphs, charts, and other images automatically. These visualizations are much easier for people without financial expertise to understand.
Users can then bundle visualizations together, putting all the visualizations they need for a specific project on one page or a set of pages. These bundles of visualizations, called dashboards, help users to analyze data much faster than traditional spreadsheet or report-based models.
Dashboards and visualizations help everyone in an organization to draw conclusions from financial data; insight isn’t only limited to an accounting department. Every aspect of an organization can leverage financial data to drive better decisions and improve their operations.
Importing and exporting
Users need to be able to put data directly into their financial reporting tool without going through a secondary piece of software, and pull data out easily so that it can be stored or transferred somewhere else. Often, smaller companies store data using things like spreadsheets and text documents. Financial reporting tools should be able to parse these common file formats, extract data from them, and store it with the rest of a business’s data.
Many financial reporting tools can create useful and intuitive data visualizations that can be used for internal or external documents. Employees need the capability to export these data visualizations using common file formats; some tools even have the ability to export files directly from a BI tool to desktop publishing or word processing software.
Users can build infographics and other visualizations in tools like Tableau.
Companies often want to use financial reporting tools to meet governmental requirements for financial disclosure. Many BI tools can export financial reports in common formats required by law. They can also help a business manage their tax disclosure requirements.
Financial reporting helps data drive profits
With a clearer picture of a business’s financial situation, it’s much easier to make valuable decisions. Financial reporting tools help businesses to leverage their data towards more efficiency, better preparation, and higher profits.
With a full-stack BI solution, it’s simple to see where revenue is leaking away, where investment isn’t translating into profit, and what expenses shouldn’t be as expensive. A good financial reporting tool works in concert with the rest of a software suite to put financial data in its proper content, so that employees make the most informed decisions possible.
Regardless of a business’s size or situation, financial reporting software can help boost profits and cut costs. There are tools for the smallest startups, the largest enterprises, and anywhere in between, at any rate of growth.
Our team of experts can help you find the tool that’s best for you. Whether you’re new to financial reporting software, looking to replace a legacy tool, or wanting to switch between cloud-based solutions, we can help you find the software that best fits your situation. Contact us today for a no-cost, no-obligation consultation today.
